Last week, the San Jose Mercury News published a confidential memo
that Microsoft chairman Bill Gates sent to about 20 of his top managers.
What's Softeletter's reaction to the memo's contents?
Gates starts by talking about how he spent a think week" devoted
to reading PhD theses, using competitive products, reading books,
newsletters and anything I can get my hands on." The purpose of
this retreat from daily business, he says, was to "make our
technical strategy clear." Yet Gates doesn't seem to have come
back with any fresh ideas about technology strategy or even products.
Instead, much of his memo deals with business and legal
confrontations--the Apple lawsuit and the FTC investigation, defensive
patents, the simmering feud with IBM, "dislike of Microsoft,"
price competition, and hostile relationships with Adobe and
Hewlett-Packard over printer software. Microsoft should embrace
distributed computing environments, says Chairman Bill, "as a
weapon against Novell." Go, NEXT, and Patriot Partners represent
potential threats to Microsoft's position as a standard-setter: We
have to get there early before significant development momentum builds
up behind the incompatible approach." What the Gates memo reveals,
in short, is a pervasive siege mentality, and not much technology
vision, insight, or innovation. So who's minding the R&D store
at Microsoft? Good question. According to Gates, Microsoft is now so
diversified that he's hard-pressed to provide real leadership.
"The complexity of the industry and its technology means that a lot
of my time is spent just trying to keep up rather than coming up with
new product ideas," he says. It is no longer possible for any
person, even our 'architects,' to understand everything that
is going on." Moreover, he complains, fresh ideas aren't
welling up from the product groups. Gates notes that Microsoft has
become rigid" and unwilling to fund "any internal or external
research." He therefore proposes to boost R&D spending to $10
million a year and promises to "reduce our technical risk by
strengthening our relationship with the research community." That
sounds pretty haphazard. How does microsoft plan to convert raw research
into successful commercial products? By building the company's
product strategy entirely around Windows. Our strategy in its simplest
form," Gates says, is lone evolving [Windows) architecture, a
couple of implementations and an immense number of great
applications." New technologies--"pen, audio, multimedia,
networking, macro language, 32-bit, advanced graphics, setup, a better
file system, and a lot of usability"--will "be accommodated as
extensions to the existing PC standard." In effect, Gates implies,
every important technology and product at Microsoft eventually will be
tied into Windows. That strategy almost certainly will turn into a
strait-jacket, but at least it provides more short-term focus than
Microsoft has shown in recent years. Any other strategic changes? Gates
is passionate about Microsoft's "really embarrassing"
performance in tech support and product ergonomics. "The number of
customers that get a bad impression because of [poor support) must
number in the millions worldwide. As CEO I take full responsibility for
these mistakes," he says. We will spend what it takes to have the
best support." Here, the important question is whether Microsoft
really will bite the bullet on support and product design. Some of the
process is already well under way: Microsoft has started to clean up its
often-bewildering interfaces and to provide better telephone support. If
Gates continues to hammer away at this issue in public (and turns
Microsoft into a genuinely customer-friendly company), he'll
probably force his rivals to respond in kind. The result could be an
industry-wide escalation of competition in service and support--which
might be a healthy trend for everyone.

COPYRIGHT 1991 Soft-letter
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